Six people pleaded guilty to crimes related to a health care fraud conspiracy in which Medicaid was billed $48 million for drug and alcohol recovery services, many of which were not provided, not medically necessary, lacked proper documentation

Six people from Ohio pleaded guilty in federal court to crimes related to a health care fraud conspiracy in which Medicaid was billed $48 million for drug and alcohol recovery services, many of which were not provided, not medically necessary, lacked proper documentation, or had other issues that made them ineligible for reimbursement.

Ryan P. Sheridan, 39, of Leetonia; Jennifer M. Sheridan, 41, of Austintown; Kortney L. Gherardi, 30, of Girard; Lisa M. Pertee, 51, of Sunbury; Thomas Bailey, 45, of Poland, and Arthur H. Smith, 55, of Austintown, are expected to be sentenced in January 2020. All six pleaded guilty to crimes related to their work at Braking Point Recovery Center, which operated drug and alcohol rehabilitation facilities in Austintown and Whitehall, Ohio.

According to the court documents:

Ryan Sheridan was the sole owner of Braking Point Recovery Center, which operated drug and alcohol rehabilitation centers in Austintown and Whitehall, Ohio, that provided detox, intensive outpatient treatment, day treatment and residential living rehabilitation.

Sheridan also owned and operated numerous other businesses, including Breaking Point Health and Fitness LLC and Braking Point Recovery Housing LLC, which owned recovery houses (or “sober houses”) for individuals attempting to maintain abstinence from drugs and alcohol.

As part of being a certified provider, Sheridan agreed to follow the rules and regulations of the Ohio Medicaid Program and the Ohio Department of Mental Health and Addiction Services.

Between January 2015 and October 18, 2017, various defendants submitted or caused to be submitted billings to Medicaid for drug and alcohol services that were: coded to reflect a service more costly than was actually provided; without proper documentation; without proper assessment documents containing valid diagnosis; billings for patients whose records did not contain diagnosis by a physician; related to treatment at unlicensed inpatient beds; billings related to Bailey dispensing of Suboxone even though Bailey did not have the authority to do so; for case management services when, in fact, the clients were working out at Sheridan’s gym; billings based on quotas provided to the nurses by the defendants to bill four to five hours of treatment daily, even if the services were not medically necessary; billing for in-patient detox and drug treatment services that were, in fact, provided in an out-patient setting, among other violations.

Braking Point submitted approximately 134,744 claims to Medicaid for more than $48.5 million in services it claimed to provide between May 2015 and October 2017. The claims caused Medicaid to pay Braking Point more than $31 million. Medicaid suspended payments to Braking Point on October 18, 2017.

The Sheridans, Gherardi, Pertee, Bailey and Smith developed a standard protocol of distributing the same amount of Suboxone to every patient seeking drug treatment immediately upon entering Braking Point’s detox program without being evaluated by a properly licensed physician to determine the medical necessity for the use of Suboxone.

The Sheridans, Gherardi and Bailey used Smith’s DEA data waiver license to dispense more than 3,000 doses of Suboxone in 2017 alone without Smith having seen the patients. Smith held himself out to be Braking Point’s medical director but only went to Braking Point approximately twice a month.

Ryan Sheridan made numerous financial transactions involving money derived from unlawful activities, including health care fraud and conspiracy to commit health care fraud.

Prosecutors are also seeking for forfeit property and proceeds obtained as a result of these crimes, including nearly $3 million, property in Columbiana, Mahoning and Trumbull counties, and eight automobiles, including replicas of vehicles used in the movies “Back to the Future,” “Ghostbusters” and “Batman.”

“These defendants stole tens of millions of dollars from taxpayers through fraudulent billing and other crimes,” U.S. Attorney Justin Herdman said. “They used the drug epidemic plaguing Ohio as a way to line their pockets and profited off the suffering of others.”

“Patients trust that providers of medical services are putting their best interests at heart and are not using them as pawns for profit” said Lamont Pugh III, Special Agent in Charge, U.S. Department of Health & Human Services, Office of Inspector General – Chicago Region. “That trust was cast aside by these defendants as exhibited by their guilty pleas. The OIG will continue to work with our federal, state and local partners to ensure that those who commit criminal acts to unjustly enrich themselves at patient and taxpayer expense are held accountable”.

“These guilty pleas clearly indicate these individuals intended to fraudulently bill and deceive taxpayers out of millions of dollars,” said FBI Special Agent in Charge Eric B. Smith. “This should send a strong message to anyone who intends to cheat the system for their own benefit. The FBI and our law enforcement partners are focused on stopping those that commit healthcare fraud.”

“Ryan Sheridan and his co-defendants wreaked havoc on the integrity of our health care system for their own personal gain,” said Bryant Jackson, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. “Health care fraud affects every American and today’s announcement illustrates that the IRS and our law enforcement partners are steadfast in our commitment to detecting and dismantling health care fraud schemes and holding perpetrators of these crimes accountable.”

“Health care fraud and the diversion of prescription medications are an increasing threat to our community,” said DEA Special Agent in Charge Keith Martin. “Dishonest and greedy healthcare providers who abuse the system for their own personal gain will not be tolerated and remain a priority for the DEA.”

“The victim here isn’t just the health care system, it’s the people struggling with addiction who needed a beacon of hope but instead found themselves at the center of a shady scheme,” Ohio Attorney General Dave Yost said. “I’m grateful for U.S. Attorney Herdman’s work to secure justice for these victims and their loved ones.”

The U.S. Department of Health and Human Services – Office of Inspector General, Federal Bureau of Investigation, Internal Revenue Service – Criminal Investigations, Drug Enforcement Administration and the Ohio Attorney General’s Medicare Fraud and Corruption Unit investigated this case. It is being prosecuted by Assistant U.S. Attorneys Mark Bennett, Jason Katz and Special Assistant U.S. Attorney Jonathan Metzler.